Creators are often told they have to learn how to “compete with free” because of online piracy. To some extent, this is true, but certainly not a new idea — piracy existed way before the Internet became so prominent in our lives. 1See, for example, Martin Luther’s Warning to the Printers, Wittenberg (1541): “Avarice now strikes / and plays this knavish trick on our printers whereby others are instantly reprinting [our translation] / and are thus depriving us of our work and expenses to their profit, / which is a downright public robbery / and will surely be punished by God / and which is unworthy of any honest Christian.” Creators have been adapting, and continue to adapt, to the realities of digital technology — through a combination of new business models, technology, and carefully constructed legislation.

But what creators shouldn’t have to do is compete with paid. That is, the law should provide little leeway for those who profit off the infringement of the core exclusive rights protected by copyright law for centuries — rights that the US Constitution empowers Congress to secure to authors in order to promote the progress of the useful arts and sciences for all of society.

Most online firms recognize the value of copyright and creative works — rogue sites, however, believe that all of that value should go directly into their own bank accounts. Recognizing the ease of doing this and the harm it causes to creators, consumers, and the economy in general, Congress has pursued legislation addressing the problem of rogue sites: the PROTECT IP Act was introduced in the Senate last May, and the Stop Online Piracy Act (SOPA) in the House this past week.

Some of the early criticism of the House bill has centered around Section 103 of SOPA, which would provide a system for notifying advertising and payment providers of Internet sites that are dedicated to piracy and using their services.

The EFF predicts “we’re going to see a flurry of notices anyway – as we’ve learned from the DMCA takedown process, content owners are more than happy to send bogus complaints.” Larry Downes, writing on behalf of TechFreedom, claims the bill is “drafted to ensure maximum litigation.” And Gary Shapiro, president of the Consumer Electronics Association, notes “the potential for abuse by the notoriously litigious content industry is clear.”

If you read the bill, however, it is difficult to see these predictions coming true. Section 103 is appropriately called a “Market-based system to protect U.S. customers and prevent U.S. funding of sites dedicated to theft of U.S. property” — the market will naturally mitigate against any flurry of notices. The robust procedures envisioned in the bill, along with the penalties for abusing the notice process, also make it an unlikely candidate for abuse.

The Market-based System

The notification system under SOPA is similar to the one provided by the DMCA where content owners can notify service providers of infringing material uploaded by users. By comparing the two notification processes, we can see that, contrary to early criticisms, the notification process under SOPA is less likely to be abused than the DMCA.

A service provider has an incentive to remove content when it receives a DMCA takedown notice. Expeditiously removing content once it is notified preserves its safe harbor from any liability it might face. There is also little downside to removing content for the service provider. The DMCA shields the service provider from any legal claims from a user whose content was removed. 217 USC § 512(g). And, in most cases, any subsequent business repercussions of content takedown are slight — at worst, a user of a free service takes his business elsewhere.

They also don’t have business incentives to comply with bad faith notices under SOPA. Each site they are ordered to block is, presumably, a paying customer or revenue source. I doubt many businesses would be happy to rubber-stamp any and every order that cuts into their bottom line without some way of making sure the site at issue is one that genuinely falls within the scope of this law.

Due Process

The bill provides a fair process for resolving disputes between content owners and ad and payment providers when they disagree about whether a particular site is dedicated to the theft of US property.

When an ad or payment provider receives a notice under SOPA, one of three things may happen: (1) the identified site files a counter-notice, (2) no counter-notice is filed and the provider complies with the notice and prevents its service from being used by the infringing site, or (3) no counter-notice is filed but the provider fails to comply with the original notice.

In the first and third scenarios, absolutely nothing happens to either the identified site or provider unless the copyright owner chooses to pursue further. In those cases, a copyright owner is limited to filing an action against the identified site’s operator, or the site itself if the operator is not locatable or resides outside the US. 5This dual in personam/in rem style cause of action is reminiscent of the one in the Anticybersquatting Consumer Protection Act, see Caesars World v. Caesars-Palace.com, 112 F.Supp.2d 502 (ED Va 2000) for a discussion of the constitutional propriety of the Act.

When an action is commenced, the court may issue an injunction — governed by the Federal Rules of Civil Procedure, the same rules that govern injunctions in any federal civil lawsuit — against the site owner to cease infringing activity. The copyright owner may then serve court orders against ad and payment providers providing services to the identified site.

When one of these providers gets such an order, it must use “technically feasible and reasonable measures” to prevent its services from being used by the identified site, but once it has put these measures into place, it has no duty to monitor.

If the provider still refuses to comply, the copyright owner may, upon a showing of probable cause that the provider has refused to comply, request further action by the court. Under the statute, the court would issue an order to show cause to the provider. If the provider cannot show cause why it has failed to comply, the court may order it to comply, or, in the case of a knowing and willing refusal to comply, it may “impose an appropriate monetary sanction”.

These are the only legal remedies available to a copyright owner under this section of SOPA. Copyright owners cannot shut down a site, they cannot collect monetary damages (any monetary sanctions go directly to the court). Success under this market-based system is getting an ad or payment provider to prevent its services from being used by a site dedicated to the theft of US property to profit off that theft.

Little room for mistakes

Under the DMCA, a content owner who “knowingly materially misrepresents” that content is infringing is liable for any damages, attorney fees, and costs incurred by the user as a result of the content being taken down. 617 USC § 512(f). One of the few cases that dealt with this part of the DMCA involved the infamous takedown of the dancing baby video on YouTube. In 2008, the Northern District Court of California concluded that a takedown notice requires a “good faith consideration of whether a particular use is fair use”; otherwise, a content owner may be liable for misrepresentation. 7Lenz v. Universal Music Corp., 572 F.Supp.2d 1150, 1156 (ND Cali 2008).

Even so, as the court pointed out, the amount of damages a content owner would face for such a misprepresentation would likely be “nominal.” Having a video removed from YouTube for a few days may be annoying, but provable financial damage? Probably not much. 8See Ben Sheffner’s discussion of the 512(f) damages provision in Lenz for more on this.

SOPA provides a similar provision against misrepresentation in notices — but while the language mirrors that in the DMCA, there are two practical realities that make it different.

First, a good faith effort to determine that an entire site is “dedicated to theft of US property” under the definition of the bill requires considerable more effort than determining whether a single file is infringing. The notification itself requires substantially more investigation than a DMCA notice. Under the DMCA, a copyright owner need only identify what work is being infringed and the content that is infringing. 917 USC § 512(c)(3). Under SOPA, the copyright owner must show, among other things, “specific facts to support the claim that the Internet site, or portion thereof, is dedicated to theft of U.S. property” and “clearly show that immediate and irreparable injury, loss, or damage will result” to the copyright owner in the absence of timely action; “Information reasonably sufficient to establish that the payment network provider or Internet advertising service is providing payment processing or Internet advertising services for such site”; and identification of evidence that indicates the site is US-directed.

Second, the risk of making a material misrepresentation is much higher. The operator of a site whose sources of income have been threatened is far likelier to push back than a user whose video was taken down. And unlike the nominal damages present in a DMCA takedown, the loss of ad revenues and credit card transactions because of a bad faith takedown could add up.

No law is immune from abuse, and copyright law shouldn’t be an exception. But the penalties for erroneous notices under SOPA have teeth, the procedures and remedies involved don’t encourage over-litigiousness. These provisions strike a proper balance that should prove to be effective against rogue sites and protective of good faith actors.

Taking the Profit out of Piracy

The provisions of Section 103 of the Stop Online Piracy Act will certainly continue to evolve during the legislative process; if SOPA and the PROTECT IP Act are successfully voted on, they will need to be reconciled before becoming law.

But these provisions represent a good start for creators who havelongnoted the ease (and injustice) of profiting from online piracy and escaping liability. They are aimed in theory at rogue sites, and in practice will be used against only rogue sites. Safeguards are built into the bill to limit abuse.

Web services who are acting legitimately and legally should welcome rogue sites legislation because effective protection of creative labor is vital to a functioning online marketplace, and a functioning online marketplace benefits us all.

See, for example, Martin Luther’s Warning to the Printers, Wittenberg (1541): “Avarice now strikes / and plays this knavish trick on our printers whereby others are instantly reprinting [our translation] / and are thus depriving us of our work and expenses to their profit, / which is a downright public robbery / and will surely be punished by God / and which is unworthy of any honest Christian.”

31 Comments

I guess there are these horrible, horrible sites you rave about out there. I haven’t seen them and I haven’t seen evidence of them, though I also haven’t looked too hard for them. The sites targeted by the ICE all seemed pretty tame and well enough intentioned. So this bill seems like a hydrogen bomb in search of a bacterium.

You may be confident that every content owner behaves nicely and it is only the horrible, horrible infringers who are nasty, but I see contrary evidence of this daily. So I am much more confident that protected speech will be eliminated by this bill and that abuse will be rampant, nay the norm. This truly is silly season.

I seriously hope no congressman would DARE vote for this. The mpaa may be powerful, but the detractors are louder. With liberal, tea party and tech groups against this, I hope favor has tipped in favor of the opposition. May it never pass.

Actually, I’ve never used a P2P service or know what one looks like. As the DMCA agent for my organization I do spend a lot of time trying to clean this stuff off the network. And I see abuse from content owners daily. Really. No free lunch to lose here. Just objections to extortion notes in the guise of take down notices. With this bill, it will only get worse as they will go after entire sites. Can you imagine McCain’s campaign site last time being taken down by this? Bank on something similar. Guaranteed.

“I do spend a lot of time trying to clean this stuff off the network. And I see abuse
from content owners daily. ”

So I’m confused. Which is it? If you are claiming that you are cleaning this stuff off the network, because I presume it’s infringent, then wouldn’t you have to admit that *your users* are abusing the content owners’ works and rights? I’ll agree that some content owners are a little monomaniacal about controlling their IP (which, by the way, is a completely legal stance backed up by the law), but are you saying that you get more bogus DMCA notices than actual infringement going on within your company/site/etc?

Online piracy is a problem, but protect-ip and sopa are NOT the solutions. Instead, Congress and Hollywood should ask the tech guys what to do. There are real parasites, but some sites are simply tributes for X character or Y series. What happens to them? Are lawsuit-happy companies going to go after them?

My fear is that sites like DeviantART are taken down. Instead of protecting creativity, these bills could stifle it. I feel they are is a bad bills no matter what. I can find a lot of things bad about these bills. They’re like charging the company that built the road for robbery because the robbers drove on that road.

Online piracy is a problem, but protect-ip and sopa are NOT the solutions. Instead, Congress and Hollywood should ask the tech guys what to do.

Have any of the “tech guys” offered up a better system for identifying and dealing with sites dedicated to infringement? I’ve seen a bunch of whining and FUD, but no one’s offering up a better solution to the problem.

I admit Congress did ask, but went with their bad bill, anyway. The tech guys haven’t been asked as much, and naturally they’re angry. You can’t just assume that a bill designed to help one industry will automatically help another.

What I’m angry about is that instead of adapting to the changing times, the entertainment industry wants to change everyone’s habits back to the way it was before the internet. The problem is, that business model is WAY outdated. They should work with the tech guys to find a solution that will help both parties and won’t destroy the Internet.

I just have WAY too many problems with the vagueness of the bill and its massive potential for abuse. Prince sued a woman for posting a video of her baby dancing to one of his songs, for crying out loud, and I’m supposed to trust these guys? No way!

I admit Congress did ask, but went with their bad bill, anyway. The tech guys haven’t been asked as much, and naturally they’re angry. You can’t just assume that a bill designed to help one industry will automatically help another.

As far as I can see, the tech crowd’s main concern is that piracy won’t be as profitable for them. All the cries about “breaking the internet” are really just about their bottom lines.

What I’m angry about is that instead of adapting to the changing times, the entertainment industry wants to change everyone’s habits back to the way it was before the internet. The problem is, that business model is WAY outdated. They should work with the tech guys to find a solution that will help both parties and won’t destroy the Internet.

I don’t get the whole “outdated business model” argument. How is creating something valuable (it costs time and money to create, and lots of people want it) and then selling it in the market (while fighting off those who would rip you off and “compete” with you by giving away your property for free) an outdated business model? I don’t get it. What you should be asking is why is it so important to these people that piracy be left mostly unchecked on the internet. And again, if the tech guys have a solution for stopping piracy, then what is it?

I just have WAY too many problems with the vagueness of the bill and its massive potential for abuse. Prince sued a woman for posting a video of her baby dancing to one of his songs, for crying out loud, and I’m supposed to trust these guys? No way!

How effective will the bill be? Based on all the whining and FUD from the usual suspects and sources, I’d say the bill will be quite effective. If the definition in the bill is too vague, then what’s a better definition that could be used to identify sites dedicated to infringement? Why aren’t these super-smart “tech guys” offering up better alternatives?

Explanation for the hard of thinking: running a business without legal protection means keeping a gun under the counter. Only that approach has its own problems.

What constitutional rights are being trampled, exactly? There’s no constitutional right to infringe copyright (which itself is a constitutional right – as well as a globally recognized human right) – at least as far as I’m aware.

The aim of SOPA isn’t to enable copyright-based businesses – they’re functioning without it. What it aims to do is make running a copyright-infringing business difficult and there are very good reasons to do so (copyright infringement is against the law for a start).

I’m sure I’m not the only one who’d like to know what good reason we have to maintain piracy as a good business proposition. Anybody?

I’m not claiming piracy is a good business proposition and I know of no one who is. Rather, I’m concerned about what gets swept along in the path of Sherman’s march to oblivion here. You talk about “the aim of SOPA” while I’m talking about what it actually does.

You misunderstand: I don’t mean that piracy is a good business proposition for the content creators. I mean that piracy is a great business proposition for the pirates.

As for what SOPA does, it doesn’t do anything since it hasn’t been passed yet. You’re talking about your particular illusion of what it will do (and – to be fair – so am I). Given that similar concerns have been voiced about the DMCA (and pretty much every single other piece of copyright legislation inn history) – I find it difficult to subscribe to your particular illusions.

There’s no constitutional right to infringe copyright (which itself is a constitutional right – as well as a globally recognized human right) – at least as far as I’m aware.

Copyright rights are not constitutional rights. The Constitution merely gives Congress the authority to create copyright laws if it so chooses, and Congress may choose not to. Thus, we have no constitutional right to any copyright law. Copyright laws give us statutory rights (and there’s some common law stuff mixed in), but none of our copyright rights are constitutionally guaranteed. A constitutional right would be something like your Fifth Amendment right to due process or your First Amendment right to peaceably assemble. Those are guaranteed.

Somebody set me straight on this very point not to long ago. I think it’s safe to say that copyright rights are constitutionally-based. But they’re just not constitutional rights as that term is generally used.

Copyright rights are not constitutional rights. The Constitution merely gives Congress the authority to create copyright laws if it so chooses, and Congress may choose not to.

…which is no different than the 13th, 14th, 15th, 19th, 24th, 26th amendments (and I believe a few others). Would anyone claim these are not constitutional? It may be technically true, but it’s a pretty stupid “point” regardless, congress would never choose to repeal the copyright act just like it would never choose to repeal all those aforementioned amendments. It’s absurd to suggest the numerous congressional powers are somehow optional; they are not. It’s an irrelevant technicality.

…which is no different than the 13th, 14th, 15th, 19th, 24th, 26th amendments (and I believe a few others). Would anyone claim these are not constitutional? It may be technically true, but it’s a pretty stupid “point” regardless, congress would never choose to repeal the copyright act just like it would never choose to repeal all those aforementioned amendments. It’s absurd to suggest the numerous congressional powers are somehow optional; they are not. It’s an irrelevant technicality.

No one would claim those aren’t constitutional rights because they are. Copyright rights are not constitutional rights, though. And I think that distinction is one worth recognizing if we’re being careful in our discussions of these things. You’re right though that the bottom line is that we either have these rights or we don’t–that’s what matters.

But you haven’t illuminated any distinction. The amendments I listed are under congressional authority just like the copyright act. If your argument is “copyright isn’t constitutional because it’s under congressional authority” then it follows that those amendments are not “constitutional” either.

But you haven’t illuminated any distinction. The amendments I listed are under congressional authority just like the copyright act. If your argument is “copyright isn’t constitutional because it’s under congressional authority” then it follows that those amendments are not “constitutional” either.

Where is the confusion here?

It’s wrong to say that the Amendments “are under congressional authority just like the copyright act.” They’re not. The Amendments grant us substantive rights that cannot be violated by Congress, like the right to not be a slave granted by the 13th Amendment. That’s a far different matter than the Copyright Clause which gives Congress the power to make copyright laws if it wants to. The distinction is a huge one. While I have no constitutional right to have any copyright rights (Congress can make them or take them as it sees fit), I certainly have the constitutional right to not be a slave (Congress cannot violate that right even if it wants to).

You haven’t presented any evidence for this supposed distinction. Congress would no sooner repeal copyright than it would the punishments for counterfeiting U.S currency. Like the enumerated powers all the aforementioned amendments are under congressional authority (AKA congressional powers). What is your evidence that some are irrevocable while others are not? Would the copyright clause (or any of the enumerated powers) not need amendment to repeal? I am trying and failing to see what point you are attempting to hang your hat on…

It’s not some supposed distinction. It’s something learned on the first day of a Constitutional Law class.

From Black’s Law Dictionary:

constitutional right. (18c) A right guaranteed by a constitution; esp., one guaranteed by the U.S. Constitution or by a state constitution.

The Constitution does not guarantee us any copyright rights. Since copyright rights are not guaranteed by the Constitution, they are not “constitutional rights.” That’s my point.

Look at Article I, Section 8 (the Copyright Clause): “The Congress shall have power . . . To promote the progress of science . . . by securing for limited times to authors . . . the exclusive right to their respective writings . . . .”

This is a grant of power to Congress to create copyright rights if it wants to. Nothing in the text of the Copyright Clause grants to the people any copyright rights. This is not a source of “constitutional rights.”

Look at the First Amendment (the Establishment Clause and the Free Exercise Clause): “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . .”

This is not a grant of power to Congress. In fact, it explicitly says that Congress does not have a certain power. Instead, it grants to the people certain rights, namely, to be free from any laws establishing or prohibiting the exercise of religion. This is a source of “constitutional rights.”

See the difference?

An Article I power like the Copyright Clause gives Congress the power to create certain laws if it wants to. An Amendment like the Establishment Clause or the Free Exercise Clause of the First Amendment tells Congress they can’t make certain types of law even if they want to. Article I powers grant certain rights to Congress. Amendments like the First Amendment grant to the people certain rights that Congress cannot violate.

Name a legitimate business that could survive without any legislation.

Fashion designers do quite well without copyright protection. Chefs do quite well without copyright protection. Comics do quite well without copyright protection. Sorry, that’s three, not one. Which is not to say that copyright is without purpose. It is, I like it. I just fail to grasp the faith-based belief that more is better.

How is fighting piracy a sign of a market failure?

Intellectual Property Wars – 500+ years of fighting ‘piracy’. TL;DR: ‘piracy’ is typically a market failure that is being exploited and taken advantage of by a non-incumbent.

And what constitutional rights of yours have been violated in the process?

I’m rather fond of my Fourth Amendment rights, you know due process, innocent until proven guilty, small stuff like that. Notwithstanding the success of the DMCA, it’s notice and takedown provisions do have their Constitutional infirmities. The proposed legislations take these and double-down on guilty until proven innocent.

Fashion designers do quite well without copyright protection. Chefs do quite well without copyright protection. Comics do quite well without copyright protection. Sorry, that’s three, not one. Which is not to say that copyright is without purpose. It is, I like it. I just fail to grasp the faith-based belief that more is better.

I just see it as the law adapting to the current reality of the internet. If following the law and respecting IP rights isn’t part of someone’s business model, then their business model is failing and they need to adapt. It’s really simple.

Intellectual Property Wars – 500+ years of fighting ‘piracy’. TL;DR: ‘piracy’ is typically a market failure that is being exploited and taken advantage of by a non-incumbent. Said incumbent (let’s call them, oh….Viacom) faced with unalloyed and inconsiderate economic competition, turns marketing challenges into a Moral Panic, aka ‘piracy’.

Pirates aren’t competitors since they don’t play by the rules. They’re just thugs and thieves. Saying it’s a “market failure” is like blaming a shopkeeper for not embracing a shoplifter. Give me a break. Painting this as a market failure is just another clever way the anti-IP crowd tries to make wrongdoing the norm. The only failure of the market comes from those who take for free what they otherwise should be paying for. Expecting someone to pay for something of value isn’t a failed business model. Good grief.

I’m rather fond of my Fourth Amendment rights, you know due process, innocent until proven guilty, small stuff like that. Notwithstanding the success of the DMCA, it’s notice and takedown provisions do have their Constitutional infirmities. The proposed legislations take these and double-down on guilty until proven innocent.

What exactly is constitutionally infirm about the notice-and-takedown regime in the DMCA? And how does SOPA make you “guilty until proven innocent”? I don’t think that means what you think it means.

Nobody quite answered my question. What happens to fansites, fanfiction, fanart and fanvids? These may use copyrighted material, but they’re also protected, since, for the vast majority of these, no one is making ANY profit off of them. What happens to them? Are they going to be stifled by this bill? Supporters may say it’s good it’s vague, but that’s not my concern. Will these materials be forced to shut down? This is my concern!

I think there are already laws on the books for those things, Trevian. Ideally, when it’s not being done for profit, I think the studios should leave these sites alone as they are simply fans showing their appreciation of something, spreading the word, and ideally, promoting the brand.

But I think the trademark and copyright owners are always within their right to ask for the activity to cease. I guess you just go underground at that point.

About

Copyhype provides news and info on current developments relating to copyright law, the media industries, and the digital economy. It cuts through the hype to bring reasoned discussion aimed at both legal and nonlegal audiences.

Terry Hart is currently VP Legal Policy and Copyright Counsel at the Copyright Alliance. Any opinions expressed on this site remain his own and not necessarily those of his present or any past employers.